Investigating a pricey Harris County land deal

February 27, 2008 8:15:02 PM PST
We're looking into a $35 million real estate deal that you are paying for. Is it a scandal in the making?

We've learned both the FBI and Harris County are investigating.

You have to wonder why we've uncovered things in weeks that some Harris County officials claim they never knew for years about. Items like a big real estate deal involving lots of your money. Our focus is over who got the winning hand in the deal.

If it's a game of poker, Michael Surface better hope the FBI doesn't have a good hand.

The Houston developer is facing up to 45 years in prison if convicted of charges of conspiracy to bribe a city official, wire fraud and lying to the feds.

"Maintain they are not true and we look forward to our day in court to prove that," Surface said.

"What we have to do is make sure there aren't any county scandals," said Harris County Judge Ed Emmett.

That's why we're investigating the players in a $35 million real estate deal on Murworth Street.

Flashback to1998. Michael Surface was working for you. The $8,800 a month head of the Harris County Building Department. But his fortunes changed quickly. Surface leaves county government in May of that year and just months later he would be the big winner. Cashing in on a multimillion dollar real estate deal with Harris County for what is now the headquarters of Adult and Child Protective Services on Murworth.

And in this county, the revolving door is allowed.

"That's right and it's absolutely outrageous," said ethics watchdog Fred Lewis.

"That's repulsive, unbelievable that somebody could do that," said taxpayer watchdog Bob Lemer.

The records unearthed by 13 Undercover reveal Michael Surface had knowledge of CPS real estate needs while still a government official.

"Everything about this transaction stinks," Lewis said.

The time line:

  • October 1997, county official Michael Surface hires a broker for taxpayers to help negotiate a real estate deal for CPS
  • Two months later, documents show negotiations with Hines Realty to keep CPS at its 5100 Southwest Freeway location for 15 more years and

    As a county official, Michael Surface is privy to key financial details of their offer. After Surface leaves county government, his former number two man at the county, Michael Yancey, continues overseeing negotiations with Hines until the county decides to make the CPS real estate deal a competition.

    Kind of a like a poker game. Hines Realty shows its hand.

    The other company making a pitch is Town and Country Ventures. The president is Michael Surface.

    I asked Jack McCown of Harris County Purchasing if this was a poker game, then Mr. Surface got to see the other guy's cards.

    "Likely," he replied.

    "Which makes it an easy poker game to play," Lewis said.

    The county purchasing department was given the job of handling the CPS real estate deal using a committee of government evaluators. Michael Yancey was a member, so was Jason Hall. Remember that name.

    The evaluation of the Town and Country Ventures proposal got a 100. You don't see a perfect score that often, but the purchasing agent defenda the choice based on dollars and cents.

    "The property they got was by far the lowest price deal," said McCown.

    We didn't see the signature of any Harris County real estate expert on the evaluation including Jason Hall. Hall joined Harris County in April 2007. You know where he worked before that? He worked at BSL Golf Corp. It is owned by a business partner of Michael Surface, Andy Schatte. It was Andy Schattee in handcuffs with Mr. Surface last month. Schattee also denies the governments corruption charges.

    "I would have liked to have seen that up front you would want to watch the process closer," said McCown.

    Shortly after the county agreed to complete the second phase of the real estate deal Michael Surface helped arrange, Jason Hall leaves county government. You know what he owns now? He owns Weston Partners Ltd, aka Jason Hall Real Estate. Its office is now located in the offices of Michael Surface's Keystone Operation.

    "There appears there were people involved who should not have been involved," McCown said.

    Commissioner Jerry Eversole abstained from the vote on the Murworth project. An affidavit explains why. Eversole's son was being paid as a legal advisor to Michael Surface less than three months after getting his law license.

    Of course the affidavit wasn't filed with the court until after the vote.

    "The law requires the affidavit to be disclosed before the vote is taken," said Lewis.

    Michael Yancey is still a top official in the county but he's not talking.

    I asked McCown looking back, if this deal stinks.

    "It appears to not look good, that's true," he said.

    One thing has become clear, when you investigate Harris County government, you discover it's a small world full of friends giving friends huge contracts. Tuesday night at 10pm, the small world continues.

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